Trade of The Week: Two-Bagging Thomas Cook

Do you remember that a couple of months ago I talked about the “flatliners” — those stocks that have fallen a long way over a long period of time and whose price is just bumping along the bottom now that all the sellers have sold and no-one (for the moment) wants to buy?
One such flatliner that I identified on 15 November was Thomas Cook. I took a punt at 20.9p-per-share, and I was pleased to see yesterday that the price had decisively broken upwards from the flatline such that it is now a “two-bagger” (doubled in price) as shown in the following InterTrader chart:

Trading Thomas Cook

The lower horizontal line shows the buying price, and the higher horizontal line indicates the guaranteed stop order (a great feature of InterTrader) that is locking in an 80% profit. As I’ve trailed the guaranteed stop order as tight as it will go on this particular position trade, I reckon I’ll get stopped out pretty soon. If so, then one of two things will happen:

  • The price will fall right back down, I can buy again more cheaply (than I stopped out), and I can have another bite at the same cherry.
  • The price will resume its upwards trajectory soon after stopping me out, and I’ll have to be content with having banked a 80% gain.

Well, it’s not a bad pair of outcomes, is it? And it might not stop out just yet, in which case my holding could go to infinity… and beyond!

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Disclaimer: this posting is for general education only; it is not trading advice.